Joint pricing and replenishment decisions for non-instantaneous deteriorating items with partial backlogging, inflation- and selling price-dependent demand and customer returns

Maryam Ghoreishi; Abolfazl Mirzazadeh; Gerhard-Wilhelm Weber; Isa Nakhai-Kamalabadi

doi:10.3934/jimo.2015.11.933

Article Contents

2015, Volume 11, Issue 3: 933-949. Doi: 10.3934/jimo.2015.11.933

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Joint pricing and replenishment decisions for non-instantaneous deteriorating items with partial backlogging, inflation- and selling price-dependent demand and customer returns

1.
Department of Industrial Engineering, Karazmi University, Mofatteh Avenue, Tehran
2.
Institute of Applied Mathematics, Middle East Technical University, Ankara
3.
Department of Industrial Engineering, Tarbiat Modares University (TMU), Tehran

Received: August 2013

Revised: July 2014

Published: July 2015

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Abstract

This paper develops an Economic Order Quantity (EOQ) model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation and customer returns. The customer returns are assumed as a function of demand and price. Shortages are allowed and partially backlogged. The effects of time value of money are studied using the Discounted Cash Flow approach. The main objective is to determine the optimal selling price, the optimal length of time in which there is no inventory shortage, and the optimal replenishment cycle simultaneously such that the present value of total profit is maximized. An efficient algorithm is presented to find the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using the proposed algorithm and the effects of the customer returns, inflation, and non-instantaneous deterioration are also discussed. The paper ends with a conclusion and outlook to future studies.

Keywords:

Inventory,
non-instantaneous deteriorating items,
partial backlogging,
Inflation- and selling price-dependent demand,
customer returns,
pricing.

Mathematics Subject Classification: Primary: 90B05; Secondary: 91B24.

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